Using iCloud Drive on my Macs as Dropbox alternative

Ok, so I am considering using iCloud Drive as a Dropbox replacement on my Macs, mostly due to the fact that currently I don't need more than 200Gb (and Dropbox only offers 1Tb option). Also, I like the integration and with High Sierra comes file sharing, which is the one thing that kept me away from iCloud Drive.

But here's the thing - unlike Dropbox, I can't manually choose which folders to sync. This may be a problem for one of my Macs that only has 128Gb storage on the primary drive.

So I know iCloud Drive has 'optimize storage' option - but does anyone know how it works? It just says that it deletes the files when space is full, but I'm guessing it doesn't wait for the drive to be completely full.

My question is this: I have two Macs. One has a 128Gb SSD, the other 512Gb SSD. Let's say that one day I end up paying for the 2Tb option and start uploading old documents (large PSD files) to it, files that I want to keep but don't need in everyday work, just occasionally. On Dropbox, I'd just have a folder called "Archive" that doesn't sync to my Macs, but if I need them, I access the web version of Dropbox and download them manually.

Since I cannot do this with iCloud drive - is it ok to keep filling it up and rely on macOS to do the work for me? Even on the 128Gb SSD (it's not going to fill it completely, is it?)